Background: Despite well-documented immunomodulation by interferon γ (IFNγ), its role and mechanism of regulation of matrix metalloproteinase 13 (MMP13) gene expression in human chondrocytes is unknown. Objective: To investigate the ability and mechanism of IFNγ to suppress interleukin 1 (IL1)-induced MMP13 expression in articular chondrocytes. Methods: Human chondrocytes were treated with IFNγ or IL1β alone or in combination. MMP13 mRNA was analysed by semiquantitative reverse transcriptase-PCR. MMP13 protein, phospho-signal transducer and activator of transcription 1 (STAT1) and p44/42 mitogen-activated protein kinase levels were measured by western blotting. MMP13 promoter luciferase, cytomegalovirus cyclic AMP response element-binding protein (CBP)/p300 plasmids and STAT1 small interfering RNA (siRNA) were transfected by the calcium phosphate method. IFNγ receptor was also neutralised. Activator protein (AP) 1 activity was monitored by the TransAM transcription factor kit. STAT1 -CBP/p300 interaction was studied by immunoprecipitation. Results: IFNγ potently suppressed IL1-induced expression of MMP13 and promoter activity. Blockade with neutralising IFNγ R1 antibody revealed that MMP13 inhibition by IFNγ is mediated by the IFN receptor. IFNγ-stimulated activation of STAT1 was directly correlated with MMP13 suppression. Knockdown of the STAT1 gene by specific siRNA or its inhibition with fludarabine partially restored the IL1β induction of MMP13 expression and promoter activity. IFNγ did not alter AP1 binding ability but promoted physical interaction of STAT1 and CBP/p300 coactivator. p300 overexpression reversed IFNγ inhibition of endogenous MMP13 mRNA expression and exogenous MMP13 promoter activity. Conclusion: IFNγ, through its receptor, activates STAT1, which binds with CBP/p300 coactivator, sequesters it from the cell system, and thus inhibits transcriptional induction of the MMP13 gene in chondrocytes. IFNγ and its signalling pathways could be targeted therapeutically for diminishing IL1-induced cartilage degradation by MMP13 in patients with arthritis.